Non-Performing Loans (NPLs) of housing finance sector have mounted to Rs 19 billion, up by 2.4 percent, during the first quarter (July-September) of the current fiscal year mainly due to rising inflation and high interest rates.
Sources in banking sector told Business Recorder on Saturday that NPLs of housing finance are continue to grow and during the first quarter of the current fiscal year, the stock of NPLs have posted an increase of 2.4 percent or Rs 400 million to Rs 19.1 billion end of September-2011 from Rs 18.7 billion as on June-2011.
Year-on-Year basis, NPLs have increased from Rs 18.1 billion in September-2010 to Rs 19.1 billion in September-2011, depicting an increase of 5.7 percent during the year. "Overall rise in NPLs of house finance is primarily due to rising inflation pressure on the economy and high interest rates of the banking sector followed by tight monetary policy adopted by the State Bank, which make some difficulties in the repayment of loan", bankers said.
NPLs of House Building Finance Company Limited (HBFCL) have decreased by 0.4 percent to Rs 6.9 billion during the year, however in percentage it share in total NPLs of the sector is 36 percent. Although, growth of HBFCL''s NPLs remains relatively low in absolute terms when compared to some of the other banking sectors, its percentage share in its total outstanding, however, is the greatest, as 51.0 percent of its total outstanding constitutes. The outstanding loans of HBFCL stood at Rs 13.5 billion in September-2011.
Excluding HBFCL, NPLs for all banks and other DFIs have increased by 9.4 percent over the year from Rs 11.2 billion in September-2010 to Rs 12.3 billion-2011. The percentage share of NPLs that all banks and other DFIs (excluding HBFCL) constitute is 25.7 percent of their total outstanding portfolio, compared to a 20.6 percent as on September 30, 2010.
Among banks, house finance NPLs of public banks witnessed the sharpest increase of almost 44.3 percent during the year under review, from Rs 1.3 billion to Rs 1.8 billion. In addition, Non-Performing Finances (NPFs) for Islamic Banking Industry were reported as Rs 2.1 billion on September-2011, which were Rs 2.2 billion at the end of last quarter Apr-Jun-11 showing a decrease of 5.2 percent.
Sources said that after demonstrating a promising growth trend till 2008, the housing finance sector has recently been showing a declining trend. The total outstanding reported by banks and DFIs as on September-2011 was Rs 61.2 billion as compared to Rs 68.6 billion as on September-2010 a decline of 11.0 percent. The total outstanding finance as on June-11 of all banks and DFIs was stood Rs 61.9 billion, depicting a decline of Rs 0.7 billion or 1.1 percent in first quarter of current fiscal.
Although, some 638 new borrowers were extended house finance during the quarter Jul-September 2011, accounting for Rs 3.5 billion of new disbursements, the total number of outstanding borrowers has remained decreased from 100,214 to 94,492 since September-2010.
Banking sector-wise total outstanding on quarters ending September-2010 & September-2011 are showed that of the total outstanding as of September-2011, commercial banks accounted for Rs 47.5 billion, Private banks reported approximately Rs 30.0 billion followed by Islamic banks of Rs 8.8 billion, public sector banks of Rs 8.4 billion and foreign banks with Rs 0.33 billion.
Other DFIs have a meager share of Rs 0.3 billion in outstanding loans of house finance sector. It may be mentioned here that at present, 23 commercial banks, HBFCL and two microfinance banks are catering to housing finance needs and among these HBFCL is the only specialised housing company in the country, which has been providing housing finance to public since 1952. While, other commercial banks have entered the mortgage business during 2003 contributing very small share in the housing finance system.